BREXIT: Impact on UK Businesses from an IT Outsourcing Perspective

Following the UK public’s decision to vote against remaining in the EU, we’ve already seen volatile swings in the value of the Pound against other currency, and the value of shares in some of the UK’s biggest businesses.

These are uncertain times, and many UK businesses may come under increasing pressure to cut costs as they come under financial pressure.

As many products purchased by UK businesses are imported, the falling value of the pound and the loss of access to the free market, means procurement and resourcing costs will likely rise.

In response to this, businesses may look to reduce costs by choosing to outsource certain functions, including IT.

As the pound decreases in value, traditional outsourcing destinations such as Bulgaria (favoured for lower costs whilst still being in Europe) and India become less attractive against UK options.

Indian outsourcing companies may leave the UK en-masse

Indian IT companies, who have offices in the UK as a gateway to business across the EU, are now facing a period of uncertainty, and may have to pull their operations out or renegotiate contracts at higher rates. A major decline in the value of the British pound would affect the value of these contracts to Indian companies, and UK businesses would have to make up the shortfall for those agreements to remain viable for Indian companies.

London businesses wishing to outsource their IT function may find that smaller, London based IT partners are the best option. In addition to renewed value, a London based IT partner provides additional benefits, such as:

Close proximity – engineers can be sent on site at short notice.

Native English speaking support staff.

Account managers and outsourced IT directors who you can have physical meetings with you to discuss your business needs and recommend the right technology solutions to help your business grow, improve efficiency or reduce risk.

Your data will be held in the UK – a requirement for some sectors such as financial services.

Leaving the EU increases business IT security risks

In fact, increased IT security risk may be one result of the UK leaving the EU. Currently, EU legislation around data protection and cyber security requires UK businesses to be somewhat vigilant at managing security risk. This would no longer be a necessity once the UK leaves the EU. The UK would also no longer benefit from intelligence sharing with other EU member states.

A good IT outsourcing partner understands and will mitigate these risks, ensuring data is highly secure and your business IT infrastructure is protected, despite not being required to by EU law.

The good news for UK businesses is that there is likely to be a 2 year transition period, where the UK goes about the lengthy and difficult process of disentangling itself from the EU, which will allow for businesses to find alternative solutions to their IT – whether they’re moving away from an overseas outsourcing partner, or looking to outsource in order to remain competitive.

Thinking of Choosing a New Outsourcing Partner? Download this checklist!

About Mit Patel

Mit - Managing Director.
In 2002, Mit founded Netstar. He has helped grow Netstar to become an indispensable partner to some of London’s finest businesses, including well known names in the Financial Services industry. Mit works across all aspects of the business including strategic planning and key account management. Mit is focused on ensuring the delivery of a high quality service, and providing strategic value to help our customers overcome their business challenges.
View all posts by Mit Patel →

Talk to Us!

Learn how we can help your business become more efficient, secure and grow with our cutting edge technology solutions and IT support. Get your free consultation today with one of our London based experts.